Case Digest (G.R. No. 85867)
Case Digest (G.R. No. 85867)
Facts:
- Razon, Inc. (formerly known as Metro Port Services, Inc.) (MPSI), hereinafter ERI, is a corporation organized in 1962 that bid for and operated arrastre services in Manila. Through public bidding on January 18, 1974, ERI and the government, through the Philippine Ports Authority (PPA), executed a management contract covering all piers in South Harbor, Manila for five years, renewable for another five years. In 1978, ERI became MPSI after Enrique Razon (owner of 93% of ERI’s equity) allegedly was coerced to endorse in blank stock certificates covering 60% of ERI’s equity to persons close to then President Marcos. When the management contract expired in 1978, it was extended to June 30, 1980, after which PPA executed a new contract with ERI/MPSI for eight years beginning July 1, 1980. On July 19, 1986, two years before the expiration of the eight-year term, PPA cancelled the management contract for alleged violations and took over the cargo-handling operations and all MPSI equipment. Two days later, on July 21, 1986, PPA issued Permit No. 104286 to Marina Port Services, Inc. (MARINA) for a one-year period (renewable), authorizing it to operate cargo-handling services, with Annex B containing an additional term that the labor and personnel of the previous operator, except those positions of trust and confidence, shall be absorbed by grantee, and that labor or employees’ benefits provided for under existing CBA shall likewise be honored. MARINA began operating the arrastre services and required the workers of ERI/MPSI to accomplish individual information sheets. Weeks later, most of the 2,700 employees learned that they had been hired by MARINA as new employees effective July 21, 1986 and, claiming entitlement to separation pay, demanded payment, but MARINA and ERI/MPSI refused to assume liability. To prevent disruption of work, PPA authorized MARINA to deduct P2,000,000.00 from rental amounts due to MARINA’s partial payment of the employees’ separation pay. Despite this, members of the Associated Workers Union (AWU) filed a notice of strike on October 12, 1987, prompting PPA, MARINA, ERI, and union representatives of AWU, Associated Port Checkers Workers Union (APCWU), Associated Skilled and Technical Employees Union (ASTEU), and Marina Management Employees (MARINE ME) to meet and forge an Agreement dated November 3, 1987 for the immediate and reasonable resolution of the long-standing claim of separation benefits arising from the impending labor strikes. Under the Agreement, separation benefits were computed at one (1) month for every year of service and PPA, through MARINA, would disburse P5 million directly to the workers without admitting liability. Although the Agreement required full payment before December 24, 1987, the workers went on strike on December 22, 1987 because equipment appraisal had not been completed. MPSI requested the Secretary of Labor and Employment to assume jurisdiction, and invoking Article 263(g) of the Labor Code, then Secretary Franklin M. Drilon issued orders directing the striking workers to return to work and ordering faithful compliance with the November 3, 1987 Agreement pending equipment appraisal, with the P5 million made available from PCGG-unfrozen funds. On May 31, 1988, Secretary Drilon issued the assailed order resolving whether MARINA assumed liability for separation pay under Paragraph 7 of Annex B to Permit No. 104286; he answered in the negative and directed ERI to pay the remaining balance of separation pay in full at the rate agreed upon in the November 3, 1987 Agreement. Secretary Drilon denied reconsideration on November 21, 1988. ERI then filed a petition for certiorari alleging grave abuse of discretion amounting to excess of jurisdiction in refusing to hold MARINA liable as successor-employer, in interpreting the permit to absolve MARINA from paying separation pay, in treating absorption as not amounting to termination by MARINA, and in failing to order MARINA to reimburse ERI. The Court noted that separation pay was undisputedly due and the sole controversy was which entity, ERI/MPSI or MARINA, should pay the workers’ separation benefits.
Issues:
Who, as between ERI/MPSI and MARINA, should be held liable to pay the employees’ separation pay arising from the cancellation of MPSI’s management contract and MARINA’s subsequent operation under PPA Permit No. 104286?Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)